Nearly a third of city property tax collections diverted into special taxing districts

Antonio Perez/Chicago Tribune

Mayor Rahm Emanuel at the Economic Club of Chicago's special luncheon meeting in Chicago, Thursday, July 19, 2018. Nearly a third of property taxes now collected by City Hall go into 143 special taxing districts controlled by Emanuel and aldermen.

Mayor Rahm Emanuel at the Economic Club of Chicago's special luncheon meeting in Chicago, Thursday, July 19, 2018. Nearly a third of property taxes now collected by City Hall go into 143 special taxing districts controlled by Emanuel and aldermen. (Antonio Perez/Chicago Tribune)

Nearly a third of property taxes now collected by City Hall go into 143 special taxing districts controlled by Mayor Rahm Emanuel and aldermen, according to a new report by Cook County Clerk David Orr.

Orr said a record-high $660 million poured into tax-increment financing funds last year, which was more than 31 percent of the $2.1 billion-plus that city government collected. The veteran clerk called the percentage “stunning.”

“This is a real pot of gold,” he said of the $660 million, noting that nearly half of it goes into TIF districts in more affluent city neighborhoods. “The fundamental question is: Are we spending it as wisely as we could, given that we really do have a tale of two cities here in Chicago, given massive wealth in some parts of the city and massive amounts of (poverty) in other parts?”

Orr has long questioned whether TIFs sometimes result in an unfair allocation of tax revenue and siphon money away from public schools. In TIF districts, all tax collections resulting from higher property values during a 23-year period are poured into special funds used to promote development, create jobs and fight blight. Many critics, including the Chicago Teachers Union, have questioned whether some of special districts were necessary in the first place.

Emanuel has taken steps to change how the city handles TIFs. He declared no new projects would be funded in seven downtown districts. The mayor also set a policy of annually declaring “surpluses” — or the amount of money returned to taxing bodies — with the bulk of it going to Chicago Public Schools. He’s also pointed to school building projects funded with TIF dollars.

Nevertheless, annual TIF revenue has grown by $199 million over the last two years. That’s largely because of Emanuel’s city property tax increases for government worker pensions that boosted city tax rates also led to higher TIF collections, as well as a wave of new construction that added property to the tax rolls.

The city also collected $40 million last year within the boundaries of a new “transit TIF” designed to help fund major upgrades to North Side CTA “L” tracks, although $25 million of that was returned to other taxing districts, including CPS, county government and the Metropolitan Water Reclamation District.

Orr also reported that for the first time, revenue from all TIF districts in Chicago and Cook County suburbs topped $1 billion. Suburban TIFs cover about one in 22 suburban properties, compared to one in four in the city, said the retiring Orr, who was delivering his last TIF report before leaving office in December.